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Nifty needs to hold 18050 to extend rally to 18250-18500; watch ITC, SBI, ONGC stocks for action

Bank Nifty has to hold above 38500 zones to witness an up move towards 38800 and 39000 levels.
(Image: REUTERS)

By Shivangi Sarda

The Nifty 50 index had opened gap up on Wednesday and escalated throughout the day to touch yet another lifetime high mark of 18197 levels. The index gave a consolidation breakout on daily and weekly time frame and decisively holding well above 18000 zones. Bulls cheered the market at higher zones and buying interest swept across the street. It formed a Bullish candle on the daily frame and closed with gains of around 170 points.

India VIX was up by 1.58% from 15.84 to 16.10 levels. A small rise in volatility indicates a volatile swing in the market at higher zones but overall comparative lower VIX suggests that any small decline could be bought and bulls are holding the tight grip in the market. Now VIX needs to cool down below 15-14 zones to continue the smooth ride. On the Option front, Maximum Put OI is at 17500 followed by 17000 strike while maximum Call OI is at 18000 followed by 18500 strike. Minor call writing is seen 18200 then 18100 strike while Put writing is seen at 18000 strike. Option data suggests a broader trading range in between 17700 to 18500 zones while an immediate trading range in between 17850 to 18300 zones. 

Nifty and Bank Nifty are trading at life time high zones and buying interest should sustain the market ahead of the festive season.

Bank Nifty support at 38350-38100 

Bank Nifty opened gap up yesterday and moved towards its all-time high of 38779 levels in the initial tick. The day proceeded with some consolidation and it closed with gains of around 110 points. It formed a small Bearish candle on daily scale with long lower shadow indicating buying was visible but only at declines. It has been forming higher lows from the last eight sessions in a row.

For weekly Bank Nifty, Maximum Put OI is at 38000 strike and maximum Call OI is placed at 40000 strike. We have seen Call writing in 38700 and 38800 while Put writing is witnessed at 38600 and unwinding in 36500 strike. Now it has to hold above 38500 zones to witness an up move towards 38800 and 39000 levels while on the downside major support is seen at 38350 and 38100 levels.

On the sectoral front, barring Realty space, all other sectors traded in the positive territory out of which Auto and Metal outperformed the broader market. 

We have a positive stance in Auto (Mahindra & Mahindra, Ashok Leyland), Open up Theme Related stocks (Jubilant Foodworkd, Indian Hotels), Consumption (ITC, Tata Consumer, Marico), PSU Units (State Bank of India, BEL, ONGC, NTPC). A hold above 18050 zones is required to extend its move towards 18250 and 18500 levels whereas on the downside support is seen at 17947 and 17850 zones.

(Shivangi Sarda is a Quantitative Analyst, Derivatives and Technical Research at Motilal Oswal Financial Services. Views expressed are the author’s own. Please consult your financial advisor before investing.)

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